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Investors have again taken a shine to copper, but this rally might be little more than a flash in the pan.

The industrial metal has risen 9.6% since June 22, to $8,045 a ton on the London Metal Exchange. The performance was ignited by positive manufacturing data from both China and the U.S. And, yes, the U.S. budget deal and the notion that the U.S. and global economies won't tumble over the fiscal cliff also gave copper a boost.

Bursting Chinese stockpiles and a ramp-up of production could dull copper's gleam in the next year, however. "I don't see the prices going up from here," says Steven Spencer, chief executive of Traderight, a United Kingdom-based commodities-trading advisor. "Extra metal will weigh" on prices.

Investors watch copper for a ready read on the global economy, because of its widespread use in everything from high-end electronics to plumbing. The metal has earned the title Dr. Copper because it takes the temperature of manufacturing and, thus, provides a prognosis for the economy as a whole.

Copper's recent rise was sparked by China's desire to get its economy humming again. Beijing recently approved more than $150 billion in copper-intensive infrastructure projects after third-quarter growth slipped to 7.4%, its weakest level since the start of 2009. China accounts for about 40% of global demand for copper.

Traders say this investment spree has yet to translate into much higher demand, however. For that to happen, stockpiles held in Chinese warehouses would have to fall. Instead, inventories have been rising since August, as copper consumers have been leery of tapping the market. Deutsche Bank estimates that more than a million tons of copper are stored in Shanghai warehouses, up from around 300,000 tons at the end of 2011.

NO MATTER CHINA'S PLANS, copper supplies are likely to rise later this year. Global production of the metal is poised to grow at its fastest rate in nearly two decades, as new mines open in South America and Asia, including
Rio Tinto's
RIO -2.302943969610636%Rio Tinto PLC ADRU.S.: NYSEUSD41.15
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-0.15-0.3645200486026732%
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12359
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(ticker: RIO) Oyu Tolgoi mine in Mongolia. Global refined-copper output is set to reach a record 21.6 million tons this year, up 7.2% from 2012 levels, according to the International Copper Study Group.

Copper prices will likely average $8,275 a ton in the first quarter of 2013, BNP Paribas forecast in a report late last month. But that's likely to be the high point for the year, with the bank expecting futures to tumble in the next three quarters to $7,425 a ton in the October-December period.

BNP is not alone. "We expect prices to trade in a range of around $7,000-$8,500 a ton in 2013, with rallies to the top end, providing an opportunity to short copper," says Gayle Berry, a commodities analyst at Barclays.

To be sure, the timetable for bringing on new mines may slip, shoring up prices. Workers at many mines also are clamoring for higher pay, raising the prospect of labor action that could choke supply. And China might decide to buy more copper.

But, with everything weighing on the metal, investors shouldn't bet on much of a rally from here.

DAVID WINNING is The Wall Street Journal's deputy bureau chief for Australia.